Falling transaction values signal shrinking volumes 

The average transaction value by 22seven users across most retailers has been in decline over the past three months. At the same time, inflation has started to accelerate.

The chart below shows the change in average transaction values for 22seven users in the R10 – 25k pm income bracket, at general merchandise retailers like Game, Makro and Takealot. 

For comparison, we’ve included the same measures for grocery, apparel and personal care retailers. Basket value growth has dipped into negative territory in all categories over the last quarter, most notably for grocery retailers, where values have declined at a faster rate in the last three months. Despite this decline, however, the average transaction value at major grocery retailers is still 6-11% higher than the 1Q2020 level – symbolic of the elevated level of grocery spending over the past two years.

With inflation accelerating in recent months, declining transaction values imply a shrinking in the volume of goods sold. This will have a greater effect on lower-margin retailers, like grocery and general merchandise, as opposed to higher-margin retailers like those in the apparel sector, for example.

Leroy Merlin extends its reach

Among DIY-specific retailers, 22seven users are increasing their spending the fastest at Leroy Merlin. This trend is consistent across all income segments; we’ve highlighted the R25-40k pm segment in the chart below. 

Where has the bulk of Leroy Merlin’s gain in share over the past two years come from? According to our research, it seems to be the result of a shift in spending away from Builders Warehouse.

Spend in KZN normalises, negatively affecting Takealot

Makro’s share of spending has recovered to levels similar to what they were before the July 2021 violence in KZN, which severely impacted its stores in the province. 

In contrast, Takealot has given back the gains it made over the same period. However, 22seven users in Gauteng continue to allocate less spending to Makro than they did a year ago.  

Game has performed better in Gauteng and KZN, but the retail chain has lost ground in the Eastern Cape and Western Cape.

Clicks vs Dis-Chem 

Spending by 22seven users at Clicks and Dis-Chem is growing faster than at the broadly defined peer group of retailers that are included in the GM Dashboard – i.e. stores that do not predominately sell groceries or clothing. 

But what does the spending split look like when you compare them to each other? The chart below shows growth in spending over the last quarter. Clicks is the dominant of the two among lower-income shoppers, whereas Dis-Chem is doing better among higher-income users. 

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